UK Treasury slams ‘Wild West’ crypto trade, calls for regulation

Members of the UK Parliament are looking to increase regulations for the cryptocurrency industry, in order to tame the “Wild West situation,” according to a Treasury committee report.

“Crypto-assets have been embedded in certain pockets of society and industry, and it is highly likely that they are here to stay. The UK Government and financial services regulators appear to be deciding whether they will allow the current ‘Wild West’ situation to continue, or whether they are going to introduce regulation. The current ambiguity surrounding the Government’s and the regulators’ positions is clearly not sustainable,” the committee said.

Under the proposal, regulatory power would be given to the Financial Conduct Authority (FCA), and would involve amendment of the existing Regulated Activities Order.

The committee report used the term ‘crypto-asset’ rather than ‘cryptocurrency,’ on the suggestion of the Bank of England’s (BoE) Martin Etheridge, who was quoted as saying, “[Cryptocurrencies] are not acting as a medium of exchange; they are not particularly good as a store of value, given the volatility; and they are certainly not being used as a unit of account.”

The BoE, in its statements to the committee, also noted that scalability and transaction costs remained a challenge, without distinguishing between the performance of the many cryptocurrencies available.

“Measured against the U.S. dollar, [BTC] is ten times more volatile than sterling, and other cryptocurrencies are even more volatile,” the BoE said.

Based on such input, the Treasury committee said, “The slow, costly and energy-intensive verification process for transactions is not unique to Bitcoin, but a fundamental feature of crypto-assets based on public, decentralised blockchains. This may ultimately limit the extent to which crypto-assets and blockchain can replace conventional money and payments systems.”

Among other risks cited in the use of cryptocurrencies were the hacking of exchanges, loss of passwords, price manipulation, use of cryptocurrencies for money laundering, and “implications for financial stability” with the growth of the industry.

The report, while critical of cryptocurrencies, did acknowledge the potential use of blockchain. “The Committee recognizes that blockchain technology may have the potential to solve problems caused by a lack of trust in data integrity and may be a more efficient method of managing certain types of data in the long term, offering higher levels of security than centralised databases,” it said.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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BitGo secures state regulatory nod for crypto custody service in US

The South Dakota Division of Banking has approved the BitGo Trust Company’s application as a cryptocurrency custodian.

In a press release, the company said it had become “the first qualified custodian purpose-built for storing digital assets.” BitGo CEO Mike Belshe said, “Custody has been the missing piece of cryptocurrency market infrastructure and this gap has kept institutional investors out of the market.”

He noted the gap between those in the custody business and those who have knowledge of virtual currencies. “Traditional custodians don’t have experience handling cryptocurrency. Exchanges that double as custodians present a conflict of interest and raise regulatory concerns. BitGo Trust Company is a qualified custodian, and therefore the only custody offering that delivers the highest levels of both security and regulatory compliance.”

The company offers 100% cold storage technology in bank-grade Class III vaults, supporting over 75 coins and tokens. To further promote the new service, BitGo is offering credit for fees if after a year, the balance of assets under custody is equal to or greater than the previous 12-month period.

BitGo boasts of being the world’s largest processor of on-chain BTC transactions, processing 15% of these worldwide.

In August, it was reported that Goldman Sachs was looking to offer a cryptocurrency custody service, among other blockchain-related ventures. The other month, cryptocurrency exchange Coinbase officially launched Coinbase Custody, which was created along with Electronic Transaction Clearing (ETC).

CNBC quoted Christian Bolu, analyst for investment research firm Sanford C. Bernstein, saying that the institutional adoption of the industry required more developed custody services. According to the analyst, “As the crypto-asset class seasons and institutional demand builds, there are a plethora of opportunities for traditional firms to engage in the ecosystem. These include the provision of custodial and asset management services as well as traditional brokerage functions like market-making.”

Among other companies looking to get into custody services are Fidelity, JP Morgan and Nomura.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Gemini custodian can reverse, alter transactions

Gemini’s Gemini dollar (GUSD) is able to be completely changed every 48 hours by a custodian. A study published by Alexey Akhunov, a cryptocurrency consultant, and Alex Lebed, a blockchain researcher, made the revelation last week, which supports previous assertions by Tyler and Cameron Winklevoss, the brothers behind the Gemini exchange and the Gemini stablecoin.

The study’s authors reviewed the stablecoin’s smart contract code in an effort to demonstrate that a GUSD implementation can become frozen or non-transferable without notice. This was mentioned in the token’s white paper, which says that the ability to pause, block or reverse any transfer is a basic principle of the token. The Winklevoss brothers said that it was necessary to allow for this to happen in order to counter any unforeseen circumstances. The white paper says, “[Gemini can] pause, block, or reverse token transfers in response to a security incident (i.e., catastrophic event).”

GUSD was implemented on the Ethereum blockchain as an ERC20 token. The authors of the study were interested in showing how the feature can independently be detected by users. They used an address that was found on Bitcoin Talk and in a Reddit thread and pointed out that there are “no trustless ways to know” that the address is Gemini’s only address.

A Gemini custodian is capable of generating an unlimited number of GUSD tokens. It can also manipulate the coin’s implementation every 48 hours, resulting in the coins becoming non-transferable. Akhunov and Lebed emphasize that such an ability does not offer “truly decentralized and censorship-resistant monetary systems.”

The two authors further state in their report, “This project has another single point of failure: the company. They can just say one day: ‘you know what, sorry, we don’t want to change your tokens for dollars anymore.’”

The new stablecoin, a direct threat to Tether, was introduced about a week ago after receiving approval by the New York Department of Financial Services. It is reportedly backed by U.S. dollars that are “held at a bank located in the United States and eligible for FDIC ‘pass-through’ deposit insurance, subject to applicable limitations.”

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Coinbase to hire over 100 employees as part of Wall Street growth

California-based Coinbase recently opened a new office in New York. Coindesk reports that it will cater primarily to institutional clients and currently operates with 20 employees. In anticipation of extreme growth, the company has said that it will hire an additional 150 employees over the course of 2019 as it continues to grab a hold of Wall Street.

The market downturn has not resulted in a downturn in interest. Institutional investor demand is on the rise and is expected to pick up even more. According to Coinbase Institution General Manager Adam White, “When we saw the market begin to correct, which we all expected, institutions didn’t lose interest. It was exactly the opposite. They look at it as an opportunity to enter when things are not too frothy.”

The company’s local staff was recruited from traditional financial entities—Citigroup, Barclays and the New York Stock Exchange, for example—operating on Wall Street. This has given Coinbase access to “an incredibly deep pool of talent.” According to White, “We have to create a bridge between financial services and technology. In order to do that, we need to pull from some of the best and brightest minds that have worked their whole careers in other kinds of traditional financial firms.”

Despite a focus on institutional investments, Coinbase clarifies that it isn’t neglecting the retail investors. Christine Sandler, the company’s head of institutional sales, told CoinDesk, “We want to partner with appropriate institutions to help the whole ecosystem grow. It’s not ‘institutional or retail,’ because a lot of these institutions will be distributors.” She added, “We’re committed to not being a U.S. company.”

Coinbase is also looking to expand its operations globally “pretty quickly.” It began forming a team to staff a new office in Tokyo last summer and has also applied for certification with Japan’s Financial Services Agency (FSA).

While Coinbase is expanding, other cryptocurrency exchanges have been shrinking. Earlier this month, Kraken laid off 57 employees, or around 10% of its workforce, across North America. However, the exchange’s CEO, Jesse Powell, still expects to add more personnel this year, possibly growing his team to as many as 1,000.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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GAW Miners CEO gets 21 months’ jail time over fraud charges

The Hartford federal court in the U.S. state of Connecticut has sentenced the chief executive officer of crypto firm GAW Miners to 21 months imprisonment on charges of defrauding investors.

On Thursday, the Hartford Business reported that Homero Joshua Garza originally faced 20 years in prison, but his sentence was reduced after the man pleaded guilty on a wire fraud charge in connection with the development and sale of a cryptocurrency called PayCoin.

Garza is expected to start his sentence on January 4, 2019, and will be released in 2021. After his release, he will be expected to undergo supervision for a period of three years which will include a six months of home confinement. He is also expected to fully pay back investors their money, which is approximately $9.2 million. This is in addition to the $9.9 million restitution Garza’s ordered to pay in connection with a separate lawsuit.

Garza founded GAW Miners to sell crypto mining hardware in May 2014. However, the firm eventually ventured into selling cloud-based services to make more money. Investigators said Garza also created a fake cryptocurrency called PayCoin (XPY), and promised investors that the coin and its trading platform PayBase would be integrated with Amazon and major credit card companies to create an XPY debit card. Records show that people invested about $9 million in cryptocurrency.

Garza also promised investors that his cryptocurrency would never fall below the $20 mark as he had arranged to have the prices always above the marked price. He claimed to have PayBase support mechanisms, which included $100 million in company reserves and coordinated price pumps. After investigation, the U.S. Securities and Exchange Commission (SEC) and the FBI revealed that Garza never had any funds reserved for this purposes. The highest price PayCoin reached was $15.92, according to CoinMarketCap data.

According to reports, Garza was able to run his operations with the help of ZenMiners who sold their cloud based services to investors. Garza had also lied to investors that the company had purchased an $8 million stake in ZenMiner. Before authorities caught up with him, Garza had run his operations for a period of nine months.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Abra announces native support for Bitcoin BCH

Cryptocurrency wallet app Abra has announced native support for Bitcoin Cash (BCH), allowing users to deposit and withdrawal directly in Bitcoin BCH for the first time.

With accounts numbering into the hundreds of thousands, Abra claims to be the only wallet service in the world where users can buy, sell, store and invest in any of 28 cryptocurrencies. While BCH had been supported before, the launch native support opens up more of the app’s features for users of Bitcoin.

The firm announced the upgrade last Sept. 12, discussed at length in a YouTube interview between Abra founder and CEO Bill Barhydt and Bitcoin.com CEO Roger Ver. The support for BCH was first announced by Abra on Twitter.

In the video, Ver describes how an increasing number of apps like Abra, merchants and other businesses are turning to Bitcoin BCH as their cryptocurrency of choice, primarily because of its speed, reliability and low transaction costs.

Now, with full native support for BCH through their app, Abra is hoping to appeal to the growing number of BCH users looking for a mobile wallet solution for handling their BCH holdings.

The support now enables BCH users to send money to their Abra wallet from any BCH wallet, as well as the on-platform storage and investment functionality.

The Abra wallet is a non-custodial wallet—cryptocurrencies and private keys are held only by the users. It is strictly peer-to-peer and doesn’t use an intermediary to hold, manage or access the funds at any time during the transactions.

Barhydt founded Abra in 2014. It has its headquarters in Mountain View, California, with an additional office in Manila, Philippines. Barhydt was a former software engineer with Goldman Sachs before coming up with the idea of Abra. It received $14 million in seed funding by RRE Ventures, First Round Capital and Arbor Ventures, as well as backing by American Express and Ratan Tata.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Thai AML body seeks power to seize crypto assets

Concerned about the growing number of cryptocurrency-related crimes, Thailand’s Anti-Money Laundering Office (AMLO) is looking to expand its powers to allow for seizure of digital assets, including cryptocurrency wallets.

“We have discussed launching our own ‘AMLO Wallet’ to hold or confiscate digital currency from illegal sources,” AMLO Secretary Witthaya Neetitham said during a recent seminar in Bangkok, according to a report from news outlet The Nation.

The desired legislation would also come in handy for the confiscation of cryptocurrency earnings from other crimes. The Nation article cited a case where Thai police had arrested the operator of a child pornography website whose digital wallet contained THB123 million ($3.8 million). “We found bitcoin in his e-wallet, but had to leave it there because we don’t have any regulations [for such seizures],” Police Captain Ekkanit Nathethong said.

Witthaya said that AMLO did have authority over companies licensed by the country’s Securities and Exchange Commission, but when it came to unlicensed entities, “We cannot identify the cryptocurrency operator or receivers when duped victims transfer money to the criminals.”

Chartpong Chirabandhu, of the Office of the Attorney General, shared that prosecutors were limited in their ability to use electronic evidence in building a case against cybercriminals.

Recently, a Finnish businessman was defrauded of $24.4 million worth of cryptocurrencies by Thai suspects, who have since admitted to the crime and are participating in negotiations for the return of the stolen amount. The suspects had invested the funds of Aarni Otavi Saarimaa in three companies, before running off with the money.

Colonel Pisal Erb-Arb, deputy commander of the Narcotics Suppression Bureau, proposed a working panel tasked to fight cybercrime. “We need to hurry. Thailand is a haven for money laundering that finances terrorism,” said Pisal, who helped with the arrest of Alexander Cazes, founder of dark web marketplace AlphaBay, where users transacted in cryptocurrencies.

The Thai government has made several policy changes with its growing awareness of cryptocurrencies. Last month, the Bank of Thailand, the country’s central bank, reversed its earlier ban on banks engaging in cryptocurrency-related activities. Now, banks are permitted to create subsidiaries for the purpose of cryptocurrency transactions, issuance of tokens, and the like.

The SEC began its regulation of cryptocurrency-related activities last May, and has approved five exchanges and two dealers since.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Japan wants to move voting to the blockchain

Japan has already shown itself to be a believer of the blockchain and cryptocurrency. It is working diligently to properly regulate the industries while allowing for strong innovation, which will lead to increased acceptance. Now, the country is set to explore the use of the blockchain as a vehicle for digital voting, which could revolutionize voting processes around the world.

In the Japanese city of Tsukuba, citizens will participate in a blockchain-based voting test for “social contribution projects.” The pilot will verify individuals’ identities by way of Japanese identification cards to ensure that the votes are legitimate. It will work the same as a “traditional” voting process, but votes will be made through a secure digital screen tied to the blockchain, instead of ticking a box on a paper ballot.

The system was already tested by the city’s mayor, Tatsuo Igarashi, who admitted that it was simple. He stated, “[I] had thought it would involve more complicated procedures, but I found that it’s minimal and easy.”

In spite of its simplicity, the rollout hasn’t been as efficient as city officials had expected. Voters have to apply for a password, which many forgot when it came time to place their votes. Additionally, it wasn’t always apparent that a choice on the ballot had been made. However, since it is only a test and tests are designed for exactly this reason, it was still a success.

West Virginia in the US began testing a blockchain-based voting system for remote military personnel earlier this year. That system incorporates facial recognition alongside ID cards to verify identities and is the first blockchain-supported voting system backed by a government in the country.

Several other governments have been contemplating or testing the use of the blockchain for voting activity, as well. Maine is looking into the feasibility of using a blockchain-based voting system, while Switzerland launched a pilot program for municipal voting in Zug this past June and July.

As cryptocurrencies are poised to revolutionize global economies, the blockchain will do the same for a great number of industries. Its secure and immutable properties make it the perfect solution to solve a number of problems that plague markets such as supply chains, elections, counterfeit goods and many more. Undoubtedly, we are in the early phases of a new global paradigm of how we do business.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Ukrainian Farmer’s Market now accepts Bitcoin BCH, other crypto

A Farmer’s Market in the Ukrainian capital of Kiev now offers its patrons the ability to buy their fruits and vegetables with Bitcoin BCH and other cryptocurrencies. The Bessarabian market is testing a project with crypto payment processor Paytomat that allows users to pay for a variety of products using one of the 11 supported cryptocurrencies. It’s another example of the continued advance of digital currency as a legitimate alternative to fiat.

According to Paytomat’s operational director, Aleksandr Kuinnoi, “At the moment this feature is working in test mode at a single vendor. With the help of a cryptocurrency wallet app customer can scan QR-code. After this, the customer is automatically transferred to the cryptocurrency converter page where he needs to enter the purchase price in hryvnias. Next, the customer transfers payment to merchant’s wallet in cryptocurrency of their choice and after the merchant gets a notification of funds being received, this transaction comes to a logical conclusion.”

The pilot program settled on the Bessarabian market due to its popularity. Kuinnoi explained, “The main idea is the symbiosis of traditions and innovations. We chose [the] Bessarabian market because it is a well-known tourist attraction and cryptocurrencies are a universal payment tool in any country.”

Paytomat has become one of the most productive crypto payment solutions in the Ukraine. It has rolled out a number of payment services that are now seen in beauty salons, schools, online stores, cafes and clinics around the country. It now works with more than 330 merchants and provides a variety of solutions, including point-of-sale terminals, QR code solutions, web panels and a plugin for WordPress to allow a site to act as a cryptocurrency gateway.

Cryptocurrency regulation in the Ukraine is approaching quickly. It still isn’t ready to be accepted as a recognized legal tender, but the more it is accepted as a fiat alternative, the better its chances are of mainstream adoption.

As proven by the recent stress test, Bitcoin BCH has been shown to have one of the strongest cryptocurrency blockchains. It’s because of this, in part, that the digital currency is a favorite among retailers, as it provides fast transaction times at extremely low costs. As each day brings new adoption of the cryptocurrency, it will continue to prove itself as the perfect global retail digital currency.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Rakuten joins Japan’s crypto fray with $2.3M exchange buy

In a surprise announcement, ecommerce giant Rakuten said that it had decided to acquire a cryptocurrency exchange in Japan to continue diversifying its interests and thus also entering the crypto space.

The exchange is called Everybody’s Bitcoin Inc. and the transaction will take place through the company’s subsidiary, Rakuten Card Co. Ltd. The stock acquisition is expected to take place on October 1 and will cost around JPY256 million (US$2.3 million).

In a note that was published in the press announcement, Rakuten said the acquisition was boosted by its view that payments in cryptocurrency will continue to grow in the future—not just in e-commerce, but also in offline retail and peer-to-peer payments.

“In order to provide cryptocurrency payment methods smoothly, we believe it is necessary for us to provide a cryptocurrency exchange function, and have been considering entry into the cryptocurrency exchange industry as the Rakuten Group,” according to the company.

Rakuten also revealed that several of its foreign exchange and securities customers “have been calling for the provision of a cryptocurrency exchange service.”

Rakuten, founded in 1997, boasts of having over 1.2 billion members around the world. It operates more than 70 businesses, spread across e-commerce, digital content, communications and fintech.

Rakuten owns the messaging app Viber and has recently invested in the car hailing app service Lyft. The company also established a dedicated research and development unit in Belfast, Northern Ireland, called the Rakuten Blockchain Lab. The company has also entered the telecommunications space, where it has been granted a licence by the Japanese government to operate Japan’s fourth largest wireless carrier.

Everybody’s Bitcoin, also known as Minna no Bitcoin in Japan, began operating as a crypto exchange service on March 30, 2017. It supports BCH-JPY trading, as well as BTC and ETH. The exchange applied for a license on September 7, 2017, but its application remains under review.

The FSA, which has only approved 16 crypto exchanges of late, has allowed companies that were already operating crypto exchanges before the regulation took effect to keep operating while their applications are being reviewed. These companies are referred to as “quasi-operators” of crypto exchanges or “deemed” crypto exchanges.

Everybody’s Bitcoin falls under this category, according to Rakuten.

“Currently, Everybody’s Bitcoin operates the business as a deemed cryptocurrency exchange and is waiting for approval of the official registration. Rakuten Group decided to acquire Everybody’s Bitcoin shares so that it can realize the early registration as a cryptocurrency exchange and develop cryptocurrency services to customers,” the Japanese ecommerce giant said.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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